The number of people struggling to cope with payday loan debts has risen by more than 13,000 in the past year, figures show.

Debt charity StepChange said they dealt with 43,716 people in the first six months of this year, compared with 30,762 for the same period last year.

The figures, showing that the charity has handled more than £72 million in debts in the first half of 2014, highlight the need for further action to ensure better protection for vulnerable people who might consider taking a loan, it said.

In July the Financial Conduct Authority (FCA) announced proposals to introduce a cap on the fees and interest charged by payday lending firms in a bid to protect borrowers from escalating debts.

The proposals, which include default fees capped at £15 and a limit of 0.8% per day on interest on unpaid balances, should mean those who cannot repay on time will never have to pay back more in charges than the amount borrowed.

The latest clampdown on the industry by the FCA is due to come into force in January, subject to a consultation period.

StepChange is calling for a tougher total cost cap than 100% of the value of the loan, especially in relation to higher value loans, as well as an obligation for lenders to have access to a database showing a borrower's financial situation - avoiding instances seen last year where thousands of people had taken out five or more payday loans.

The organisation also said there should be stricter limits on how much firms can profit from default fees, encouraging more responsible lending, and makes the case for the proposed default charge of £15 to be brought in line with the £12 default charges for credit cards.

Chief executive Mike O'Connor said more can be done to protect those facing serious money worries.

"Today's figures show that the payday market all too often fails to treat customers fairly, especially those in financial difficulty," he said.

"High-cost short-term credit is rarely the answer to financial difficulties. While the FCA's proposed price cap is a crucial step forward, there is still much work to be done to ensure that payday loans can no longer plunge people into a cycle of unsustainable borrowing and entrenched financial hardship.

"Consumers will continue to need access to short-term credit and FCA action should also stimulate the reform of this market. This needs to include problems in the adjacent markets including overdrafts, logbook loans and home credit where consumers also suffer detriment.

"The goal of an affordable lending market treating consumers fairly will also involve others but the FCA has a critical role to play in creating the right environment."

It is very important to raise financial literacy in order to solve the problem with payday loans. People have to know how to deal with their finance correctly, how they should act in different controversial issues and what rights they have. There are many frauds in credit system so people should be aware of how to find a reliable borrower. Besides it is urgent to find a smart approach to running a personal budget and dealing with http://vitaloans.co.
uk/

It is very important to raise financial literacy in order to solve the problem with payday loans. People have to know how to deal with their finance correctly, how they should act in different controversial issues and what rights they have. There are many frauds in credit system so people should be aware of how to find a reliable borrower. Besides it is urgent to find a smart approach to running a personal budget and dealing with http://vitaloans.co.
uk/cannybruno

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